Review of 2012 – EUR - Skanska

Other European countriesPolandCzech RepublicUnited KingdomIn Other European countries, Skanska has residential development operations in Prague and Warsaw,as well as Cambridge in the U.K. Poland and the U.K. are new residential development markets forSkanska, and sales of the first projects gathered momentum in these countries in 2012.Revenue OtherEuropean countriesResidentialCzech Republic, 55%New markets, 45%Development in Other European countriesRevenue Operating income Operating margin, % Capital employed 1 employed, % 2Return on capitalEUR M 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011Czech Republic 3 30 56 –7 0 neg 0.6 39 41 neg 0.7New markets 4 24 5 –6 -5 neg neg 122 49 neg negTotal 54 61 –14 –5 neg neg 161 90 neg neg1 Capital employed according to IFRS.2 Return on capital employed based on operating income according to segment reporting.3 Including Slovakia.4 Poland and the United Kingdom.CompetitorsCentral GroupFinepDOM DevelopmentJW ConstructionBerkeley GroupBovis HomesMajor events during the yearDue to the weak market performance in the CzechRepublic and Slovakia in 2012, Skanska decided tophase out operations in Slovakia and focus solely onPrague in the Czech Republic. This resulted in writedownsof land valued at about EUR 9 M.Skanska’s residential development operations inPoland and the U.K., which were launched in 2011, bothinitiated sales in ongoing projects in 2012, and there hasbeen great interest in Skanska projects in the media andamong potential home buyers.In Other European countries, a total of 355 homes weresold in 2012. The number of homes started was 457.MarketThere was continued weakness in the Czech housingmarket in 2012. The main reason for the weak marketwas political instability and the weak economic outlook,which led to uncertainty among potential homebuyers.In Poland, the political situation and demand are morestable, while the economic situation in the U.K. is strained.There was relatively good demand in the Polish and U.K.submarkets where Skanska pursues residential developmentoperations.EarningsIn the U.K. and Poland, Skanska Residential Developmentwas in a start-up phase. While revenues rose fromvery low levels in comparison with the preceding year, afurther increase is required to deliver positive earnings.The Czech market remained weak, and as was previouslymentioned, earnings were charged with writedownsof land in Slovakia.Outlook 2013PolandCzech RepublicUnited KingdomThe market outlook for our submarkets in Poland and the U.K. wererelatively stable, resulting in stable prices. However, the Czech marketremains weak.50 Residential Development Substantial growth Growth Stable Decline Significant declineSkanska Review of 2012 – EUR version